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Wednesday, 21 March 2012

UK 2012 Budget highlights

Now you may wonder why everyone in Jersey is so interested in the goings on in Westminster when it comes to budget time, and the answer is simply because all our laws come from the UK, there has not been an original thought arising from the States of Jersey within my lifetime and for probably a century previous.

I was listening for any further detail on the implementation of the changes to Low Value Consignment Relief but the Chancellor George Osborne did not even mention it in his speech.

The details of the change can be found here. Nota Bene: "Businesses without a UK establishment who make taxable supplies of goods or services in the UK will be affected by the removal of the VAT registration threshold."

The supply of goods is only taxable by those companies who make a VAT return, otherwise the VAT is payable by the purchaser on import.

The first thing I notice is that there is no actual plans to cut spending... there is a plan to cut spending as a percentage of GDP, but this relies on GDP growth to cause the reduction rather than any actual cut in the level of expenditure.

Still it is fiscally responsible as one would expect from the Conservatives.

Big hits for Jersey -

  • Closing Stamp Duty Avoidance loophole on properties owned by overseas Companies.
  • Tax gamblers where they live, not where gambling company is
  • Closing LVCR loophole

So these are the points which were of most interest to me:

Plan to give taxpayers statements showing where their tax goes, such as on healthcare and on interest payments on the national debt

I will want to see the fine detail on this, it is all very well saying that for example 50p of every pound goes on healthcare, but what percentage of that 50p goes to for example management costs, drugs companies. Any number of sins can be hidden within the descriptor 'healthcare' including a £150,000 golden handshake to the senior civil servant.

Personal tax allowance - threshold at which workers start paying income tax - will rise to £9,205 in April 2013, up £1,100 from the £8,105 level this April,  "My goal is a tax system where the lowest paid are brought out of tax altogether"

Finally some sense, income tax thresholds should be increased as benefits and entitlements are decreased, it makes little sense to process 10,000 tax forms which will only net a minimal amount of taxation, the cost of operating our own treasury department and the costs to business of operating ITIS to deduct amounts less tha£50 simply do not make good business sense. There are cost savings to be made by taxing fewer people which would render unnecessary a lot of treasury department roles.

Corporation tax being cut to 24% in April, having already cut to 26% from 28%. Corporation tax will be 22% by 2014.

A first class move which will pressure other nations to end their over taxing, over spending ways.

Debt management office consulting on issuing longer dated gilts beyond 50 years and case for perpetual gilts

Lend us money that we never have to pay back?

Plan to tax online gambling based on location of gambler not company

So not such a good thing for the Channel Islands and Gibraltar.

Government spending in Afghanistan will be £2.4bn lower than planned over remainder of parliament

There is no benefit to the UK economy to spend money outside the UK, money spent inside the UK will at least be re-spent (the multiplier effect) and why have we invaded Afghanistan anyway? I would have thought we would have learnt our lesson in the nineteenth century or from the fall of the Soviet Union.